MARKET UPDATE:
After OPEC’s unexpected move to reduce output pushed market participants to refocus on the supply deficit, oil prices recorded their largest gain in a year. Beginning in May, OPEC + will reduce its production by 1.16 million barrels per day, with the reductions lasting until the end of 20231. As a result, energy companies in Asia rose, particularly in China, where the CSI 300 index rose by 1%. However, the higher price of oil also alarmed investors who feared that inflation might accelerate and compel the Fed to continue raising interest rates. On the other hand, given that the Nasdaq 100 has increased by about 20% this year, a higher oil price also served as a trigger for profit-taking.
The US dollar index (DXY) dropped 0.4% to 102.37 as hopes for strong US growth were dampened by the ISM manufacturing report’s weaker-than-expected results. In March, the ISM indicator decreased to 51.2 from 54.2 in February, falling short of the consensus prediction of 53.5. Contrastingly, the positive PMI data from China indicated that manufacturing activity increased in March for the third consecutive month. Since peaking at 105.31 in early March as the Fed hinted at a pause in its rate increase cycle and concerns about global growth subsided, the DXY has been on a downward trend.
Due to the weaker US currency and lower bond yields, gold prices resumed their upward trend and increased 1.2% to $1973.80 per ounce. Since February, when it plunged below $1800 due to increasing inflation expectations and real yields, gold has been on the upswing. Although gold is regarded as a hedge against monetary depreciation and inflation, it usually suffers when real interest rates increase.
What happened in the Asian session?
The RBA has chosen to maintain the Cash Rate at 3.60%. Since the full effects of the interest rate increase have not yet been felt, the central bank has chosen to keep interest rates unchanged this month while it evaluates the impact of the increase and the outlook for the economy. To guarantee that inflation returns to the desired range of 2-3%, the Board anticipates tightening monetary policy even further.
What does it mean for the Europe & US Sessions?
Trading the AUDUSD pair could be advantageous for those looking to benefit from a possible rise in the US dollar’s strength, particularly if the upcoming JOLTS Job Openings report comes in above forecast. The pair may decline towards the psychological support level at 0.6700 on a sustained breach under 0.6760.
The Australian Dollar (AUD)
Key news events today
Cash Rate
RBA Rate Statement
What can we expect from AUD today?
The Australian Cash Rate is anticipated to rise from 3.60% to 3.85% but given that the Australian CPI y/y declined for two recorded periods, it may be a dovish increase. The RBA rate announcement will be a source of confirmation for traders. If approved, AUD will probably proceed quickly.
Central Bank Notes:
- The cash rate was raised by 25 basis points to 3.60%.
- Board prioritises returning inflation to target, with a likely need for further monetary policy tightening.
- Board to closely monitor the global economy, household spending trends, inflation, and labor market outlook when assessing interest rate increases.
- Next meeting on 4 April 2023
Next 24 Hours Bias
Weak Bearish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
Today’s NZD has no major news events that are affecting it. The upcoming RBNZ Official Cash Rate (5.00% vs 4.75%) and Rate Statement will probably determine the trajectory of the price. The RBNZ’s upcoming actions can be predicted by the Rate Statement, with a more hawkish stance possibly increasing the value of the NZD and a more dovish one decreasing it.
Central Bank Notes:
- Monetary Policy Committee increased the OCR from 4.25% to 4.75%
- Higher interest rates are needed to reduce inflation and support employment sustainably
- Severe storms in North Island will increase inflation and disrupt production.
- Next meeting is on 5 April 2023
Next 24 Hours Bias
Mixed
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
Today’s second-tier data releases look to have a mixed effect on the EUR. The German Trade Balance, which represents a healthy trade balance for the largest economy in the Eurozone, is anticipated to rise slightly from the previous month’s figure of 16.7 billion euros to 16.8 billion euros. The Spanish Unemployment Change, however, is anticipated to rise from the previous month’s number of 2.6K to 8.5K. The shared currency could be under some strain as a result.
Central Bank Notes:
- ECB raised interest rates by 50 basis points to ensure the 2% inflation target is met
- Inflation is projected to average 5.3% in 2023, with growth at 1%, and underlying price pressures remain strong
- The bank will continue to monitor market tensions closely and will be data-dependent in its policy rate decisions
- Next meeting on 4 May 2023
Next 24 Hours Bias
Mixed
Oil
Key news events today
No major news events.
What can we expect from Oil today?
Oil prices should maintain the price increases brought on by the unexpected output cut by OPEC+. The cartel’s action could also mean that the demand side of the issue might not be stable soon.
Next 24 Hours Bias
Mixed
Global Markets:
Asian Stock Markets: Nikkei up 0.35%, Shanghai Composite up 0.49%, Hang Seng down 0.61%, ASX up 0.18%
European equities, the DAX futures up 0.89%, CAC 40 up 0.62%, FTSE up 0.03%.
US Stock Market: Dow jones up 0.98%, S&P 500 up at 0.37%, Nasdaq 100 down at 0.27%.
Commodities: Gold at $1997.80 (-0.13%), Silver at $24.14 (+0.48%), Brent Oil at $85.48 (+0.65%), WTI Oil at $80.98 (+0.70%)
News & Data
- USD) JOLTs Job Openings (Feb) Forecast 10.400M, Previous at 10.824M at 19:30
- (AUD) RBA Rate Statement at 10:00
- (AUD) RBA Interest Rate Decision (Apr) Actual 3.60%, Forecast 3.60%, Previous 3.60% at 10:00
- (CAD) Building Permits (MoM) (Feb) Forecast 2.0%, Previous –4.0% at 18:00
- (GBP) MPC Member Tenreiro Speaks at 14:45
Technical Outlook
GBPUSD
The GBP/USD chart’s general momentum is bearish. Price may respond negatively and fall to the first support after encountering the first resistance. The first support level, which is at 1.2285 and coincides with a 23.60% Fibonacci decline, is an overlap support level. A 38.20% Fibonacci reversal is also present at the second support level at 1.2211, which is another overlap support level.
The first resistance level on the resistance side is at 1.2432, and it is a strong resistance level with multiple swings. This figure lines up with a Fibonacci projection of 78.60%. A surge-high resistance level at 1.2622 which also happens to be a 127.20% Fibonacci extension is the second resistance level.
EURUSD
The general momentum on the EUR/USD chart is bearish, suggesting a possibility for a bearish response from the first resistance level. The first barrier level, which has experienced multiple swings, is located at 1.0905. Price might eventually hit the first support level at 1.0765 if it drops from this level. This level is a solid overlap support and a 38.20% Fibonacci correction at the same time.
The second support level, which also overlaps with the first level and is at 1.0689, corresponds to a 61.80% Fibonacci retracement.
On the opposite side, the second resistance level, which is a swing-high resistance level and a Fibonacci extension of 127.20%, is at 1.0964. The first support level, a swing-low support level, is located at 1.0792.
AUDUSD
The price may respond bearishly towards the first support after hitting the first resistance, according to the AUD/USD chart’s bearish momentum. The first support level, which is a decline support level at 0.6741, also coincides with a 23.60% Fibonacci retracement. The overlap support level at 0.6640 has a 61.80% Fibonacci reversal and serves as the second support level.
The first resistance level, on the other hand, is at 0.6791 and is a multi-swing high resistance level with a 38.20% Fibonacci reversal. The second support level, which overlaps the first and contains a 50% Fibonacci retracement, is located at 0.6859.
It’s important to keep in mind that the chart’s overall momentum is bearish, which could lead to a bearish reaction after hitting the first resistance level in the direction of the first support level.
USDJPY
The general momentum on the USD/JPY chart is bullish. A bullish continuation in the direction of the first resistance mark is possible. A 50% Fibonacci rebound lines up with the first support level, which is an overlap support level at 131.67. Furthermore, the second support level, a swing low support level, is located at 129.73.
The first resistance mark on the upside is located at 133.79, which also happens to be a multi-swing high resistance and a 50% Fibonacci retracement. A 61.80% Fibonacci rebound lines up with the overlap resistance level at 134.84, which is also the second resistance level.
Additionally, there is a multi-swing low support level at 132.17, which serves as an intermediary support level. Additionally supporting the possible bullish continuation, this level might also be useful.
S&P 500
The US500 chart’s general momentum is bullish. There is a chance that the market will maintain its upward trend toward the first resistance level of 4158.90.
Given that it is pullback support and falls on the 23.60% Fibonacci retracement, the first support level at 4060.40 is a safe place to start. The second support level, which is located at 4000.21 and is a declining support, is also a strong level because it falls on the 38.20% Fibonacci retracement.
The first resistance level, which is located at 4158.90 and corresponds with the 127.20% Fibonacci extension, is a robust multi-swing high resistance. The second resistance level, which is located at 4191.38 and corresponds with the 138.20% Fibonacci extension, is also a strong level because it is a swing high resistance.
Additionally, there is an intermediate resistance mark at 4120.06 that might serve as a price barrier.
WTI CRUDE OIL
The WTI chart’s overall momentum is presently bearish, indicating that prices may continue to decline. Looking at the data, it is possible to see that the price will continue to decline in direction of the first support level.
The swing low support at 77.10, which corresponds to a 23.60% Fibonacci reversal, serves as the first level of support. The price might find support at this level and be kept from dropping any lower. The second level of support is a retreat support, located at 73.80.
The first resistance level on the upswing is located at 82.34 and is a multi-swing high resistance. Price could possibly move upward towards the second resistance level at 86.78, which is a swing high resistance that coincides with a 127.20% Fibonacci extension if it were to break through this level.
SILVER
The first support level, which is an overlap support level, is located at 23.54. This level has served as a support level for the past several tests, making it a suitable level for a potential bounce. The second support level, which is also an overlap support level, is located at 22.97. Another excellent level for a potential bounce is this one because it has served as a support level when tested numerous times in the past. The initial resistance mark on the upside is located at 23.98. This level has historically been significant and is a multi-swing strong resistance level. It is also at the level of the 127.20% Fibonacci Extension, which increases convergence at the level.
The second resistance level is at 24.60, which is a swing-high resistance level.
ETHEREUM
The first level of support is at 1725.89, which also happens to be a powerful overlap support level and a 78.60% Fibonacci retracement. In the event of a further downward trend, this level may serve as a support level and offer a bounce for the price.
The next support level to look for is at 1667.52, which is another overlap support level and lines up with a 38.20% Fibonacci retracement if the price were to drop below the first support level. This level has frequently served as a support level in the past and might do so again in the future.
On the resistance side, the first level to keep an eye out for is at 1834.29, which is a strong resistance level with multiple swings. The price could possibly signal a bullish reversal and move even higher if it were to break through this level.
At 1775.92, which is another overlap support level and coincides with a 50% Fibonacci retracement, there is an intermediary support level to keep an eye out for. In the event of a slight decline, this level might serve as support.
